Today it occurred to me that the problem was with the data on small and family owned businesses - like mine, my brother's biz, my sister's biz, the sandwich shop on Federal Highway, the Realtors over on Palmetto Park Rd, the Pizza Shop that closed on the corner...
I see it in the vacancy of shops and offices here in sunny South Florida, and I hear it on the phone in speaking with my clients and prospects around the country. Business sucks - and that's for the lucky ones still IN business. The big corporations obviously had lots of fat to cut, considering unemployment and the length of the work week, but the little family business was always run pretty lean - and it relied almost exclusively on the owner. Everyone else working there usually supported the owner in his efforts. The supporting cast is gone and the small business owner is just barely hanging on. Business creation? Dead as fried chicken.
And the U.S. equity market is making new highs at the same time that the Junk Bond default rate is well into double digits - and rising. It really pays to be big, connected, and to have gone to one of the establishment's favored schools.
So, what can the government do? State, Local, and Federal governments can cut their regulatory elements to the bone. Will they? NAFC. Our government HATES business, especially small business.
I wonder what my little town in Wilson County, Tennessee will be like in 5 years. There is no big company there to bring employment, tax revenue, etc... (with the exception of WalMart - I wonder if the local folks know just how much damage that WalMart did to their nice little 200- year-old-city. Their down-town was once a vibrant commercial district that has no been reduced to a bunch of antique shops with starving proprietors.) 20% of the county's residents are already receiving food assistance, yet they still have enough money to smoke (and state laws in much of the South, tobacco states, do not exactly encourage people to quit smoking... there seems no shortage of older folks walking around with Oxygen tanks), which kinda/sorta tells me what kind of cultural/educational system they have...
Not that what they do have is the kind of life you would want for your kid... endless muffler, oil change, car repair, Taco Bell and The Waffle House type businesses... and in any event, as I said before.... business sucks. Yet the young people I speak with who are working in these establishments are college educated and indebted, well the ones without the Prison Tattoos, that is.
But at least The Powers That Be have decided to abandon the US$ in order to bail out the big banks... So we got that going for us.
Real unemployment is over 17%, not 10.2%, the highest since the 1930's - yet consumer debt as percentage of GDP is the U.S. is the highest in the history of modern economics.
While I lack the proverbial crystal ball, I think it highly probable that something bigger than just another economic dislocation is in the offing.
Libertariananimal (at) gmail (d0t) com
7 comments:
Hey Greg,
I'm wondering why the government hate small business? Don't they create jobs to keep the people busy? People without work tend to do stupid things like over throw the government. I do know that small business aren't united and don't donate money to politicans so that's probably my answer.
Small businesses are overrated. 2/3rds of the economy is made possible by the S&P 500 (the biggest businesses). The majority of small businesses are done part-time. Most have 1-2 employees at best. More than 50% of small businesses fail after 5 years. Almost all their start-up capital is loaned/stolen from friends and family members of the owner instead of banks that won't touch them. They have flooded this country to a multitude of nail salons, Jimmy Johns and other "businesses light," while the "real" businesses like airlines, energy companies, banks and car companies do all the heavy lifting. They have a million excuses why they can't afford benefits, while the bosses take home six-figure salaries. And nobody has such a power advocacy circle, like the U.S. Congress, as small businesses. Congress gives them anything and everything they want, running to their aid when called upon. Finally, in the long run, any small business that succeeds will be bought up by a large business anyway. For every Microsoft, there are 9 small business failures.
Most people I know work for themselves. In the last few months, lots of them have found themselves working part time contracts, fewer hours a week or fewer billable hours. It also takes longer getting paid, and a few have had clients default on them.
This is a hidden factor, invisible in the numbers.
They all make enough, many are still making good money, but their voluntary expenditure has dropped, sometimes drastically. There's no sign of that changing; in fact I'd say its getting worse.
Re Bureaucrat; I think a lot of small business real economic throughput is hidden, but still important. We'll only really notice it when its gone.
The official definition of a "small business" is having under 500 employees. Many small businesses have offices all over the globe.
B,
As a Gov. employee your tone on the small business is somewhat negitive. Hence, Greg's comment gov. hates small business.
As for the small business. Business does suck and I live in one of those "Best Places to Start a Small Business", as told by a major journal recently. Hope many didn't read that.
The best way to run a small business today is: Do every thing your self, market smartly ( like you employee 5-10 to 1 ratio ),diversify,do away with bottom ten (+/- ) percent of clients ( if your losing on them) and keep cost down.
Oh, I forgot, keeping cost down means less write-offs, and more taxes. Gov. hates small business!
Peace
You mentioned Walmart and their impact. Check out www.people of walmart.com.
Peace
Look on the bright side, Wal-Mart probably can’t survive the collapse of globalization, same goes for any business plan reliant on global wage arbitrage.
@ bureaucrat
Global wage arbitrage is why small businesses are mostly nail salons and pizza parlors, anything made here can be made elsewhere cheaper, but delivering pizzas from shanghai is problematic.
Post a Comment